Seneca Capital Management last week closed its first collateralized loan obligation--a $300 million deal called Nob Hill CLO, Limited. Wachovia Securities underwrote the offering. This is the sixth securitized product the firm has done. "We had managed bank debt in existing high-yield CDOs," said Bradley Kane, portfolio manager. "We have been working on this for a little over a year and thought it was the right time for us to expand into a more dedicated bank loan [portfolio]."
The portfolio consists of at least 95% bank loans, with the remaining five percent saved for high-yield bonds. Bonds and second lien can make up to 10% of the portfolio. Kane declined to comment about pricing.
Although Wachovia has never underwritten any of Seneca's previous structured products, Kane said several employees had experience working with the bank at other firms and that led to the bank's selection. The firm has not determined if it will do a second CLO and has not set a time frame for that decision.
With the new CLO, San Francisco-based Seneca now has about $2 billion in securitized product assets under management. Seneca is an affiliate of the Phoenix Companies.